-cell replacement therapy (BCRT) is emerging as a promising approach for the treatment of diabetes. However, large scale application of BCRT is currently hindered by 3 factors: 1) the scarcity of human islets, 2) the need for systemic immunosuppression, and 3) the mediocre performance of cell therapies in vivo, which is increasingly understood to be the result of insufficient oxygen availability. Bioartificial pancreaa based on immunoisolating macroencapsulation devices may offer a solution to the first 2 problems by enabling the more efficient use of human islets and ultimately human stem-cell derived -cells (a source with unlimited supply), without the need for immunosuppression. Macro-encapsulation devices (such as the TheraCyteTM) have been extensively tested, demonstrating protection of allogeneic tissue without immunosuppression in small and large animal models as well as humans. The effect of oxygen on islet viability and function and device size has been recently demonstrated by our group and by others in vivo in small (rodents) and large animals (pigs) and in a single clinical case. There is increasing consensus that enhanced oxygenation to encapsulated islets in vivo may be the critical missing link for success. We have demonstrated that without enhanced oxygen availability, the device size required for islet capsule efficacy in an average human is prohibitively large (e.g. 600-1000cm2). The primary factor dictating device size is the oxygen availability to islets to support their viability and function (glucose-stimulated insulin secretion, GSIS). GISIS is inhibited at a much higher partial pressure of oxygen (pO2) than that of viability (e.g. 10mmHg as opposed to 0.1mmHg). Enhanced oxygen supply (higher pO2) compared to what is available in vivo at transplant sites can reduce the required dimensions to the size of a postage stamp. Enhancing oxygen supply by delivering oxygen to the device enables the support of a substantially higher number of islet equivalents per device unit surface area (IE)/cm2. We hypothesize that enhanced oxygen supply is necessary to facilitate high cell loading numbers, and to further reduce device size requirements by enabling diabetes reversal with lower islet (-cell) numbers. If this is achievable, one to three TheraCyteTM devices (3cm2 each) will be sufficient to reverse diabetes in a heavy adult human. With the current proposal we plan to test the above hypothesis by addressing the following Specific Aims: Aim 1: Establish the minimum islet dose required for diabetes reversal in allogeneic non- immunosupressed and simulated autologous rat models utilizing a macro-encapsulation device supplied with enhanced oxygenation. Aim 2: To utilize the findings in Aim 1 to establish the maximum loading (and thus define the minimum device size) of a macro-encapsulation device that reverses diabetes in rat allogeneic non- immunosuppressed and simulated autologous transplant models in the presence of enhanced oxygenation. Aim 3. Demonstrate the applicability of findings in terms of clinical safety, and to establish islet survival and a and - cell function using the TheraCyteTM device with enhanced oxygen supply in clinical recipients.